By KEVIN WALKER
Michigan Correspondent

CHICAGO, Ill. — More than a quarter-billion more bushels of corn than expected were in the USDA’s quarterly grain stocks and acreage report last week.
The CME Group hosted a press conference at the Chicago Board of Trade immediately after the USDA’s report Thursday morning, to analyze the data with Terry Rogensack of The Hightower Report and Jerrod Kitt of Linn Group. The USDA estimated nationally, growers planted almost 92.3 million acres of corn this spring and 75.2 million acres of soybeans.

“The most significant stat here is stocks for corn,” Kitt said. “They basically found about 300 million more bushels of corn. This gives the trade a lot more breathing room. Quarterly stocks is what traders are going to be looking at.”
He said some of the added corn may have come from crop that was saved because of new efficiencies in the ethanol-making process. “Overall, the stocks report is probably going to be pretty negative for trade.”

On acreage, Kitt said it was “really a fade trade. The quarterly stocks number was a lot more significant this time around. Acreage numbers were about as expected. The (acreage) numbers in August are probably going to be more significant.”

On soybeans, he said the numbers could be even lower than reported – 75.2 million acres – because of prevented planting. “There’s some pretty good economics in just taking the prevent plant (insurance payment) rather than suffering through a potentially bad yield,” Kitt said.

“Cotton was big, larger than expected. Wheat was probably about as expected (at almost 47.2 million harvested acres).”

“The markets called sharply lower this morning,” Rogensack said. “Certainly, a shockingly high number for the grain stocks report – 370 million bushels (of corn) above trade expectations. Producers certainly had every incentive in the world to push and get as many acres planted as possible. We certainly could see this number come down over time as some of these acres are adjusted lower, especially in North Dakota.”

The problem, he said, is without that tightness in the old crop, there could be a 1.4 billion-bushel carryout for the coming year.

“This is sharply above what traders were looking for,” Rogensack explained. “We’re looking at pretty aggressive liquidation follow-through from what we’ve seen here recently.”

On soybeans, he said what will be needed is a “very high yield” to avoid tightness down the road.

“If you end up with even tighter planted acres than what the USDA came out with, at 75.2 million acres, this was below expectations. If you drop acres down by a million acres, then you’re looking at a very tight carryout for the new crop season – but one thing that does stand out is November soybeans might be cheap, especially after a couple days of liquidation selling because of the negative corn numbers.”

He explained 20 percent of soybeans are planted south of the Midwest and that temperatures in these more southerly areas are expected to be 100-plus degrees Fahrenheit during the next several days.

“Spring wheat numbers are going to end up being pretty tight as we look forward,” Rogensack said. “The problem is, Russia has 25 (million) to 30 million tons of extra grain to distribute this year. It’s going to be a difficult time for the grain markets, at least over the near term.”

Pivoting back to corn stocks, Kitt said he thought it would be like last year “where yield numbers were continually getting clipped.” Still, he said, the livestock industry “really needs this break. They really need this extra corn.”

Midwest production

Farmers in states in the Farm World area were projected to have planted the following, according to the USDA Acreage report:

Corn: Indiana, 5.9 million acres; Illinois, 12.5 million; Michigan, 2.55 million; Kentucky, 1.44 million; Ohio, 3.5 million; Iowa, 14.2 million; and Tennessee, 770,000.

Soybeans: Indiana, 5.3 million acres; Illinois, 8.9 million; Michigan, 1.95 million; Kentucky, 1.52 million; Ohio, 4.7 million; Iowa, 9.2 million; and Tennessee, 1.38 million.

Winter wheat, harvested: Indiana, 390,000 acres; Illinois, 720,000; Michigan, 680,000; Kentucky, 410,000; Ohio, 860,000; Iowa, 16,000; and Tennessee, 310,000.